The Competitive Advantage of Nations

301 Pages·2013·8.8 MB·English

The Competitive Advantage of Nations: An Exposition of the Limitations of the
Single Nation ‘Diamond’ Theory in the Case of Zimbabwe’s Exports to the OECD
and South Africa Markets.
Thesis submitted for the degree of
Doctor of Philosophy
At the University of Leicester
By
Silencer W. Z. Mzembi Mapuranga
Department of Management Centre
University of Leicester
University of Leicester December, 1999.
Management Centre
Leicester, LEI 7RH
© S.W.Z. M-Mapuranga
UMI Number: U484768
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Signed..................................
S.W.Z. M-Mapuranga
i
Acknowledgements
I am indebted to my Supervisor Professor P. Jackson whose encouraging
guidance made the management of this research seem easy. I must also thank
the staff members of the High Degrees Office for all their most appreciated
patience and assistance. To my parents your inspiration was second to known,
and Tendai, Itai and Shorai thank you for giving me reasons to persevere.
ii
Contents
Chapter 1
The Diamond Paradigm and the International Competitive Advantage of Nations
Page
1.1 Introduction 1
1.2.1 An overview of the Sources of Competitive Advantage of the Nations 2
1.2.2 Diamond Model Determinants of Competitive Advantage 6
1.2.2.1 Factor Conditions 7
1.2.2.2 Demand Conditions 8
1.2.2.3 Firm Strategy, structure and rivalry 8
1.2.2.4 Related and Support industries 8
1.2.2.5 Chance 9
1.2.2.6 Government 9
1.3 Objectives of the Study 10
1.4 Reasons for the Study 11
1.5 Organisation of the Study 12
Chapter 2
Economic and Export Trade Background of Zimbabwe
2.1 Export Trade Development 14
2.2 Zimbabwe’s Trade Relations with DCs 16
2.3 Zimbabwe’s Export Composition 19
2.4 Zimbabwe’s Competitive Advantage 20
in
2.5 Zimbabwe’s Revealed Comparative Advantage 24
2.6 Technology base of Zimbabwe’s Industries 28
2.7 Zimbabwe’s Labour resources 30
2.8 Competition in Zimbabwe’s sub-sectors 30
2.9 Industrial Clustering 34
2.10 Summary 36
2.10.1 Demand 36
2.10.2 Competition Intensity 36
2.10.3 Factors endowment 37
2.10.4 Related and support Industries 37
Chapter 3
The Concept of the Single-Nation Diamond (SD), Double-Diamond (DD) and
Multiple-Diamond (MD) Framework
3.1 Introduction 38
3.2 Diamond Paradigm (Single-Diamond) 40
3.2.1 Factor Conditions 41
3.2.2 Related and Support Industries 42
3.2.3 Firm strategy, structure and rivalry 43
3.2.4 Demand Conditions 44
3.2.5 Chance 46
3.2.6 Government 46
3.3 The Relationships between the Diamond Variables and
firm Competitiveness 48
3.4 Criticism of Porter’s (SD) Diamond Model 50
3.4.1 Domestic Focus 50
IV
3.4.2 SD and the small Nations 51
3.4.3 Choice of Variables 51
3.4.4 Financial Component 52
3.5 Support for the SD Model 53
3.6 The Double-Diamond and Multiple Diamond models 54
3.7 Outward Orientation 57
3.8 SD, DD, MD and Outward Orientation 58
3.9 Export Business orientation and Strategic Focus 59
3.10 Summary 61
3.11 Hypothesis 62
Chapter 4
Technology, Multinational Companies and the Government’s Strategic Trade
policy
4.1 Introduction 64
4.A.1 Technology 65
4.A.2 Technology as a Separate Variable 67
4.A.3 Technology Outsourcing and Export Capability Building 68
4.A.4 Technology resources and Export Supply Capability 70
4.A.5 Summary and Hypothesis 71
4B. Multinational Companies
4.B.1 Introduction 74
4.B.2 The Eclectic Paradigm 76
4.B.3 MNCs and indigenous firms’ industry relationships 79
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4.B.4 MNCs and local industry changes 80
4.B.5 MNCs and the spillover incidence 83
4.B.6 Summary and Hypothesis 84
4C. Government
4.C.1 Introduction 90
4.C.2 Government’ Strategic Trade Policy and the ‘Diamond’ 90
4.C.3 Summary 95
Chapter 5
Export Product Differentiation, Finance and Exchange rate Effects
5.1 Introduction 97
5.2.1 Product Differentiation 98
5.2.2 Differentiation Synthesis 100
5.3 Financial Limitations 105
5.4 Impact of Exchange rate Variability on Export Competitiveness 106
5.4.1 Exchange rate passthrough 108
5.4.2 Pricing to market and the‘law of one price’ 109
5.4.3 Pricing to market, passthrough and the market structures 110
5.5 Summary 111
VI
Chapter 6
Business networking in foreign markets
Introduction 114
Rugman A and J. D’Cruz networking Model 115
Nature of Business Networking 119
Cluster Leadership by ‘Flagship Firm’ 121
Key Success Factors 123
Network extended to foreign markets 125
Foreign market Information Factor 127
Information acquisition and Utilisation 128
Information Utilisation model 130
The Johansen and Vahlne model 135
Summary of the information models 138
Business Networking,’ Perceived Value’ and the Information Factor 141
Chapter 7
Methodology
Introduction 144
Problems encountered during research 145
Research Design 146
Type of Study 146
Method of Data Collection 146
Questionnaire Design 147
Pre-testing of the Questionnaire 148
Sample Selection Method 149
Operationalisation of the Variables 153
Demand (DM1, DM2, DM3) 154
VII
7.4.2 Factors endowment (AF, NF) 155
7.4.3 Technology (TG) 156
7.4.4 Firm strategy, structure and rivalry (FSSR1, FSSR2) 156
7.4.5 Related and Support industries (RS) 157
7.4.6 Multinational Companies (MNC) 158
7.4.7 Government (GVT.) 158
7.4.8 Export Management Orientation (EMO) 159
7.5 Summary of Variables operationalisation 160
7.6 Method of Data Analyses 162
7.6.1 Technology and MNCs Hypotheses 162
7.6.2 SD, DD, and MD Models Test 163
7.6.2.1 Hypothesis Testing (Method 1) 163
7.6.2.2 Hypothesis Testing (Method 2) 165
7.6.2.3 Hypothesis Testing (Method 3) 166
7.6.2.4 Alternative test 166
7.6.3 Government Hypothesis test 168
7.6.4 Product Differentiation and Exchange rate effects 169
7.6.4.1 Vertical and Horizontal Product Differentiation 169
7.6.4.2 Exchange Rate ‘Passthrough’ Factors Test 173
7.7 Summary 175
Chapter 8
Data Analysis
8.1 Introduction 176
8.2 Preliminary Data Analysis 176
8.3 Sample Characteristics 177
VIII